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A federal judge on Wednesday ordered five former USI Insurance Services LLC brokers who left to join rival Lockton Cos. LLC last month to honor the nonsolicitation and nondisclosure clauses in their employment agreements.
The team of five brokers had sued USI seeking a ruling that the restrictions in the agreements were illegal and unenforceable when they left the brokerage.
After the broker team left USI, about 20 clients contacted the brokerage saying they were moving their business to Lockton, court papers say.
Ruling in Matthew Simmons, Sheila Murray, Jack Mitchell, Jackie Rodriguez, Madison Lieffort, and Emily Carter v. USI Insurance Services LLC, a federal district court in Tampa, Florida, said that Mr. Simmons, the leader of the team that joined Lockton, had signed an employment agreement restricting him for two years from solicitating or attempting to solicit USI clients he worked with or had information about, among other things, and to serve a 60-day notice period if he left the brokerage.
Mr. Mitchell signed a similar agreement, and the other brokers also agreed to restrictive covenants, court papers say.
“In exchange for their Agreements and employment, Simmons and Mitchell were highly compensated. In the year preceding his departure from USI, Simmons received over $3 million in payments,” the ruling stated.
In earlier filings, Mr. Simmons argued that USI had no “substantial relationships” with various clients that originated from his close personal relationships, including friendships he had developed at high school and in college. Only “substantial” relationships are protected under Florida law, he argued.
The court ruled, though, that: “Florida courts have held that an employer has a legitimate business interest in its substantial relationships with specific prospective or existing customers even when an employee brings customers to the employer on the basis of existing personal relationships.”
The court ordered the brokers to comply with the restrictive covenants until another hearing in the case is held in about 60 days.